MILWAUKEE, May 26, 2006 (PRIMEZONE) -- Ademi & O'Reilly, LLP announced that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of Escala Group, Inc. ("Escala") (Nasdaq:ESCL) common stock during the period between September 5, 2003 and May 10, 2006.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please us at gademi@ademilaw.com or toll-free at 866/264-3995. You can view a copy of the complaint (http://www.ademilaw.com/cases/Escala.pdf), or join this class action online at www.ademilaw.com. The deadline is July 10, 2006. You may move the Court to serve as lead plaintiff through counsel of your choice, or you may choose to do nothing and remain an absent class member.
The complaint charges Escala, its majority shareholder and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and the activities of its majority shareholder. As a result of defendants' false statements, Escala stock traded at artificially inflated prices during the Class period, reaching a high of $35 per share in February 2006.
On May 9, 2006, Escala announced that it had been advised that Spanish judicial authorities, as part of an investigation into the stamps-collectibles sector, had collected documents from Afinsa Bienes Tangibles, S.A. ("Afinsa") of Madrid, Escala's majority shareholder, and also from Escala offices in Madrid. In addition, the Company announced that certain members of the board of directors of Afinsa, including an Afinsa representative on Escala's board, were being questioned.
On this news, Escala's stock dropped from $32.00 to $12.23 per share and then to $6.55 per share on May 10, 2006. Then on May 11, 2006, Spanish prosecutors charged 11 people involved in the scheme, including five individuals affiliated with Afinsa, and Escala's stock collapsed to as low as $4.01 per share, before closing at $4.34 per share.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company's parent company was engaging in a pyramid scheme and lacked requisite internal controls to prevent fraudulent activities; (b) the Company's merchant/dealer activities were dependent on sales of Afinsa, which accounted for 62% of its sales, and Afinsa was engaged in fraud; and (c) Afinsa was engaging in a pyramid scheme.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca